Financials Notes: Deutsche Bank & Barclays

December 13th, 2011 by Trefis Team
-19.35%
Downside
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DB: Deutsche Bank logo
DB
Deutsche Bank

Bank stocks swung wildly last week with early gains in the first three trading days of the week almost wiped out on Thursday before a partial recovery on Friday. Investors kept their hopes pinned on European leaders coming up with a solution to tackle the European debt monster, but the flurry of activity in the region was negated by the European Central Bank’s (ECB) decision to stay away from buying more European bonds at least for the time being. European leaders managed to get 26 of 27 nations in the Euro-zone to agree to a new treaty that will impose more stringent fiscal requirements for the signing nations – a move aimed at getting the ECB to play a more active role in fixing the region’s broken economy. As for this week, Deutsche Bank (NYSE:DB) and Barclays (NYSE:BCS) grabbed the headlines for significant events pertaining to their business.

Deutsche Bank

The largest German bank faces another legal battle, this time from Monaco-based investment fund Sebastian Holdings. The fund filed a counter-suit against a $245 million claim by Deutsche Bank, asking the bank to cough up $2.45 billion to make up for profits it lost during the period late 2008-early 2009. Deutsche Bank had closed the funds open foreign exchange positions when the latter had failed to honor a margin call, but Sebastian Holdings now claims that the margins were bloated because the bank allowed its trader to perform unauthorized trades on the fund’s behalf.

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You can read more about this at Deutsche Bank Slapped with Margin Call Suit by Disgruntled Counterparty.

The bank also received a shocker late in the week when the European Banking Authority (EBA) directed it to raise capital worth €3.2 billion ($4.2 billion) to compensate for the loss in value of sovereign bonds in its portfolio.

See our full analysis for Deutsche Bank

Barclays

Reports are making the rounds that the U.K.’s second largest bank is planning to cut-down its operations in Asia’s third largest economy. [1] In its efforts to cut costs across its worldwide operations, Barclays has reportedly decided to stop handing out any more retail loans in India, and will cut down its headcount in the country from the existing figure of 1,200 to less than 1,000. The bank will continue to focus on its corporate, wealth management and institutional operations in India while also selling-off its current portfolio of mortgages, consumer loans and credit card loans.

See our full analysis for Barclays

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Notes:
  1. Barclays likely to exit retail business in India, Economic Times, Dec 7 2011 [↩]